FOR IMMEDIATE RELEASE
Washington D.C. — The Securities and Exchange Commission today charged the owner of a Maryland-based real estate company with conducting an offering fraud and spending investor money on such personal expenses as his mortgage, country club dues, and season tickets to the Baltimore Ravens. The agency also charged a former stockbroker for participating in the scheme.
The SEC alleges that Wilfred T. Azar III sold investors purported bonds in his company Empire Corporation, which he touted as a successful and profitable business with the resources to pay promised annual returns of 10 percent. Along with Joseph A. Giordano, Azar and his company raised more than $7 million by making these and other false and misleading statements exaggerating the safety and low risk of the bonds. However, Empire Corporation was functionally insolvent in reality, and despite saying investor funds would be used for various corporate purposes, Azar used the money to pay personal expenses as well as thousands of dollars in compensation to Giordano for participating in the fraud. Giordano also steered a mutual fund that he managed into purchasing the bonds despite knowing the company was nearly broke. The scheme collapsed when they were unable to recruit new investors to fund Empire Corporation’s operations and repay existing investors, who did not receive their promised returns and lost substantially all of their investments.
In a parallel case, the U.S. Attorney’s Office for the District of Maryland today announced criminal charges against Azar.
“As alleged in our complaint, investors in Empire Corporation were fraudulently sold worthless bonds after Azar and Giordano misled them entirely about the profitability of the company,” said Sharon B. Binger, Director of the SEC’s Philadelphia Regional Office. “Giordano also violated the trust of his customers by entangling them in what he knew was a bad investment.”
The SEC’s complaint filed in federal court in Baltimore charges Empire Corporation, Azar, and Giordano with violations of Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 as well as Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. The complaint also charges Giordano with violations of Sections 206(1), 206(2) and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 as well as Section 34(b) of the Investment Company Act of 1940. The SEC seeks disgorgement plus prejudgment interest and penalties as well as permanent injunctions. The agency is seeking an officer-and-director bar against Azar.
The SEC’s investigation, which is continuing, has been conducted by Michael F. McGraw and Dustin Ruta and supervised by Brendan P. McGlynn in the Philadelphia Regional Office. The SEC’s litigation will be led by Nuriye C. Uygur. The investigation followed an examination conducted by Andrea Dittert, Peter J. DiMartino, Kevin P. Logue, and Hope A. Santo of the Philadelphia office under the supervision of Frank A. Thomas. The SEC appreciates the assistance of the U.S. Attorney’s Office for the District of Maryland.